While five states were able to pass cannabis legalization initiatives during the 2020 General Election, 31 cannabis measures were approved in 35 cities and counties across California setting the groundwork for new local markets and cannabis business opportunities.
In the past decade, local elections in California have seen over 200 cannabis ballot measures and nearly 90 percent of them have passed.
“It’s great to see California voters continuing to see the benefits of legal cannabis businesses in their cities and counties,” said Ellen Komp, Deputy Director of California NORML. “Legal businesses bring in sales taxes, payroll taxes, jobs, and economic stimulus while reducing crime and providing safe, tested products to consumers.”
Many of the ballot questions were focused on cannabis taxes rather than directly opening opportunities for cannabis businesses. However, establishing tax structures for cannabis businesses is often a first step towards local governments allowing cannabis businesses later on through a regulatory ordinance.
An issue California has faced since Proposition 64 passed in 2016 is the lack of participation from local governments in the adult-use market. As of June 2020, only 168 of California’s 540 cities and counties allowed for any type of legal cannabis retail operations, and many of those don’t permit for adult-use stores, only medical operations. So, the 31 victories from the election represent a growing embrace of the industry statewide.
Advocates have also touted the economic benefits that cannabis taxation would bring to local governments suffering under the weight of the COVID pandemic and related fiscal fallout.
Hirsh Jain, San Jose-based retailer Caliva’s Director of Government Affairs, has also noted that there are only about 700 storefront dispensaries across California. “These cities themselves will account for an additional 20% of the total [number of stores],” said Jain. “When you see 30-35 cities taking action, that will significantly increase the number of licenses available. What we’ll see on average in these cities is four to five licenses being issued.”
The victories across the state also highlight the growing acceptance of cannabis use and cannabis businesses. Even in local jurisdictions where cannabis operations have been historically unaccepted, voter have now approved tax structures for cannabis business if they are approved in the future. This could mean that cannabis business opportunities will continue to sprout up across the state through future elections.
Examples of the initiatives that passed in California are described below:
- Calabasas — Measure C, which authorizes a business tax of up to 10 percent establishing a tax structure if cannabis businesses are allowed in the city in the future
- Costa Mesa — Measure Q, which allows for two retail cannabis storefronts within a limited area of the city and establishes a retail tax of 4 percent to 7 percent
- Encinitas — Measure H, which allows for cannabis-related business operations within the city, including but not limited to retail, cultivation, and manufacturing
- Marina — Measure Z, which will enact new zoning restrictions for cannabis businesses and maintains a 5 percent tax on gross receipts
- Oceanside — Measure M, which authorizes a tax of up to 6 percent on cannabis businesses
- Weed — Measure B, which establishes cannabis business regulations
Read the full break down for each city and county here.
If you plan on applying for a cannabis business license in these municipalities, you’ll also need to apply for approval from the state in order to compliantly operate your business. We have templates available for some of the business plans required on California’s state application – the templates are specific to California’s regulations and can be found here.